Still a long way to go

Craig Mackenzie and Stewart McMahon of ENDS Carbon examine the long tail of carbon performance in large UK companies

There has been a great deal of talk about carbon management in the business community in the past few years, but how well are companies actually managing ­emissions?

ENDS Carbon has recently completed a detailed survey of the carbon performance of the FTSE 350 Index – the largest 350 companies listed on the London Stock Exchange.

FTSE 350 Carbon Scorecard resultsWe looked at commitments and targets, measurement and disclosure of carbon information, use of carbon data to assess performance and to inform business decision-making, and, finally, how well companies actually reduce emissions over time.

These various factors were assessed using about 30 indicators, combined into a Carbon Scorecard. Data was provided by the Carbon Disclosure Project (CDP), corporate websites and a special survey sent to companies. The research was carried out partly to inform a new investment index developed with FTSE and the CDP: the FTSE CDP Carbon Strategy Index (see

Leaders and laggards

As figure 1 shows, there is a broad distribution of carbon performance among large UK-listed companies. Many companies still appear to be doing little or nothing to manage carbon emissions, despite a decade of talk about the need for action on climate change.

Nearly 150 of the UK’s largest 350 companies achieve less than 15% on the Carbon Scorecard. This score typically means the company has made little or no commitment to reduce carbon emissions and does not measure or report them.

Another 100 or so score less than 40%, which usually means they do report emissions but their emissions intensity is rising (38% of the 180 companies that disclose the necessary data) or they have not yet published a quantified target for reducing emissions (46% of 350).

ENDS Carbon Scorecard Top 20 in FTSE 350Only a small proportion of the companies have targets and are reducing emissions (22% of 350). But there is a small group of about 20 carbon leaders that have strong commitments to reducing emissions, have developed sophisticated approaches to managing carbon and are delivering year-on-year cuts as a result (see table 1). Such companies include Unilever, BT, Rolls-Royce, Tesco, Vodafone and others.

Only 19% of companies in the FTSE 350 Index have targets consistent with the 1.7% per year necessary to meet the UK carbon budget set by the government’s Climate Change Committee (see figure 2).Commitments to climate impacts within the FTSE 350

Performance drivers

Emissions reductions do not happen by themselves. One finding from our survey is a clear link between having sophisticated carbon management systems and delivering emissions reductions.

Companies scoring best on carbon management quality also show better performance for emissions reductions. Based on their score for a range of carbon management indicators, the top 20 companies within the index achieved an average score of nearly 60% for emissions performance, compared with an average of less than 35% for the bottom 20 companies.

The relationship is not perfect – some companies with poor carbon management systems do reduce emissions, and vice versa – but the relationship is there and statistically robust.

FTSE 350 companies with strongest targets


Most companies in the tail of figure 1 do not disclose their emissions, leading to a poor score. Without disclosure we cannot assess performance.

Sixty one companies in the FTSE 350 Index do not disclose their carbon emissions and more than 100 of the next 150 or so in the FTSE All-Share Index do not disclose.

Non-disclosure correlates with size: 90 of the FTSE 100 disclose their emissions but only about half of companies in the next 250 and an even lower percentage in the cohort below do so. Perhaps in some cases non-disclosure masks excellent carbon management, but it seems more likely to indicate a failure to tackle the carbon agenda.

It is worth adding that even those companies that do report do not always do so reliably and consistently over time, and only 25% have their data externally verified.

Playing catch up

Without concerted action, the gap between the companies with a developed carbon strategy and those without will rapidly grow as leaders race ahead. The good news is that it is much easier to catch up than to be a pioneer.

The Carbon Scorecard provides a checklist for late starters to benchmark their performance against the leaders and identify best practices to emulate.

ENDS Carbon is publishing a series of benchmark reports based on this research for both late starters and leaders who want to find out how to stay ahead (for more information, go to  

Top 10 largest companies that do not disclose their emissions

Carbon Reduction Commitment

How will the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme affect this picture? Most companies covered by this research are likely to be included in the CRC and so will be compelled to measure and disclose their carbon emissions to the Environment Agency. This is likely to improve the results of our 2011 survey.

The public league table may also provide impetus for carbon emission reductions. Though, ironically, after the first year the design of the CRC may end up rewarding late starters more than long-term leaders. Companies that have not started their emissions reductions yet will have a much richer field of financially rewarding abatement opportunities available to them than companies that are already very carbon efficient.

FTSE 350 Index companies benchmarking supplier carbon emissions for super sectors

Indirect emissions

For many companies in the FTSE CDP Carbon Strategy Index, direct carbon emissions are much smaller than those arising from company supply chains and the use of company products. The Carbon Scorecard used additional indicators to assess companies in sectors with large supply and those that manufacture products.

The picture is similar to that for direct carbon emissions – though here even the leaders are only in the early stages of action. The index leaders are committed to extending their ambitions beyond operational emissions to engage suppliers and customers in carbon reductions. But so far they have only taken the first steps: asking for data, starting to benchmark performance and holding meetings to discuss action.
FTSE 350 Index companies that have changed products or developed lower-carbon lines

Data availability and performance metrics in this area are not as well developed as for operational emissions, so it is not as easy to compare performance. But given the significance of supply chain and product-use emissions, this is a performance assessment area ENDS Carbon would like to develop for the survey in future years.

Stakeholder demand

The survey and the FTSE CDP Carbon Strategy Index, of which it forms a part, is a response to a growing demand from pension funds and other large institutional share­holders for investment tools addressing climate change risks. This is partly due to investors wishing to support the compan­ies in which they have a stake in their effort to mitigate risks. Over the last decade, through the Carbon Disclosure Project and indices such as FTSE4Good, investors have shown that by engaging with companies, they offer useful reinforcement to company action. We hope that by providing systematic information about the carbon risk exposure and performance of leading listed companies around the world, the new FTSE CDP Index Series will make a similar contribution.Carbon Scorecard element

For more information of FTSE 350 corporate carbon management performance see

Biography: Dr Craig Mackenzie is technical director of ENDS Carbon, a leading carbon benchmarking provider. He also directs the Centre for Business and Climate Change at the University of Edinburgh Business School. Stewart McMahon is a research analyst with ENDS Carbon.

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